This invention relates to a system and method for authorizing a cashless transaction and, more particularly, to an electronic security system for commercial transactions.
Transaction cards, and in particular, credit cards, debit cards, and prepaid cards, have become a common device through which to purchase a variety of goods and services. When a transaction cardholder presents the card to a merchant for the purchase of goods or services, or for receiving currency, authorization from the card issuer is desired by the merchant in order to minimize theft and potential risk of loss to the merchant and/or card issuing company.
The systems currently in place for preventing use of stolen or lost credit cards typically include reliance upon the cardholder's name and account number that is embossed on the card. Many cards have special designs, holograms, or some other form of identification such as a photo of the cardholder on the card. Most credit card companies require that the card be signed on the reverse side by the cardholder. This signature is then compared by a merchant with the signature on the sales receipt which must also be signed by the cardholder. If the signatures appear to be the same, then the card is deemed to be valid and the credit is awarded. However, it is easy for a forger to see the signature on the back of the card and practice that signature until a reasonable match can be provided by the forger. Many forgers are successful using this scheme. Consequently, many credit card issuing companies continue to pay for unauthorized charges until the cardholder learns that his or her card is missing and reports it to the credit card issuing company.
Accordingly, a security system that prevents fraudulent transactions that may result from unauthorized possession of lost or stolen credit cards or sales slips, and that requires very minor changes to a transaction card and the transaction method is desired.